Gibson Guitar Company Files for Bankruptcy Protection
- Gibson Brands Inc. has apparently taken the first major step in returning to its core business of guitar building by filing for Chapter 11 bankruptcy in U.S. Bankruptcy Court in Delaware, seeking protection from lenders and a transfer of the corporation’s control while restructuring its holdings and operations.
According to a Fortune report based on court documents, Gibson will repay bank loans while under the control of its prominent bondholders, who will replace current stockholders. The group of bondholders taking the company’s reins will engineer a new loan of up to $135 million to keep Gibson operating.
- Gibson's bankruptcy filing was widely expected. Earlier this year, Standard & Poor's downgraded Gibson Brands over fears it could default on its debt obligations.
In recent months, Gibson has reduced the workforce at its Custom Shop guitar business and put its spacious Memphis showroom and factory on the market, vowing to relocate in a smaller building.
According to a report on the bankruptcy filing in The New York Times, Gibson’s electric guitar sales in 2017 were 10.5 percent higher than in 2016, reaching $122 million.
The Nashville-based guitar maker was founded in 1902. Originally, the company started in Kalamazoo, Michigan, to make mandolin-family instruments.
Its popular Les Paul electric is one of the bestselling guitars of all time, and has been used by famous musicians like Eric Clapton, Jimmy Page, and Pete Townshend.
The company has just under 900 employees, according to court documents.
It also owns famous brands such as Baldwin pianos and Wurlitzer, which is known for its pianos, organs and jukeboxes
- source : Pitchfork